Tuesday, July 25, 2006



The death of Doha?

Negotiations on the WTO's Doha round have collapsed in acrimony after the US refused to give ground on farm subsidies, and almost certainly will not be completed this year. Which, given that Bush's blanket authority to negotiate trade deals expires soon, may mean that it will not be completed until sometime in 2009, if at all; given the parochial interests of the US Senate, no WTO deal would survive ratification, and countries would be foolish to adjust policy based on toothless promises from a President who cannot back up his decisions. This means that the Doha round is now all but dead - or if not dead, "somewhere between intensive care and the crematorium" (to quote the Indian representative).

This is bad news for New Zealand, and not exactly good news for the world's poor, but I'm not entirely upset by it either. While a rules-based, multilateral trading regime which allows poorer nations free access to rich nations' markets is absolutely vital to lifting the poor out of poverty, such a regime must be fair - and what the US was proposing wasn't. Instead, they were demanding that every dollar less they spent on pork for their farmers was matched by a dollar's worth of new access to developing country markets (and the dollars they were proposing to "sacrifice" weren't the important ones either). In other words, it was the same old scam of demanding a one-sided deal in which the rich get access to poorer nations' economies, while effectively giving up nothing in return. And faced with that sort of bullshit, I think the poor should simply walk away, just as they have done in the past. This time, though, it was the US that walked, rather than give an inch to the consensus the poorer nations had built.

The tragedy here is that the US has scuttled a deal that, while it did not promise anything near what it should have, poorer nations were at least broadly happy with and willing to build on. On the plus side, at least things didn't get any worse, and now we have an opportunity to start from scratch to build a truly fair trade deal, one that works for the poor, rather than just the rich.

6 comments:

The U.S. wants us all to line up and beg for bilateral where they set all of the terms - just like United Arab Emirates, Oman, Morocco, Jordan etc.,and all those other little charmers,have done or are about to do....This is a real test of the CTU, Fed. Farmers and others.

Posted by Anonymous : 7/25/2006 06:43:00 PM

Still - not many people go into trade negotiations planning on screwing themselves.

Posted by Genius : 7/25/2006 09:25:00 PM

Fantastic news. This put a BIG smile on my face when I heard it this morning :)

Posted by Asher : 7/25/2006 10:08:00 PM

Genius: But if you believe in the law of comparative advantage then by not freeing up trade the US *is* screwing itself... Honest to God, you'd expect the US to grasp at any opportunity right now to generally buy itself some good will around the world as well as well as do the right thing by its own core principles and finally start to get its farmers off welfare. But...no... Really pretty ugly stuff that's so unnecessary.

Posted by stephen glaister : 7/25/2006 11:57:00 PM

SG,

1) That might be true except that the general population doesn't see it that way. So the politicians may want to keep protections up for job security reasons.

2) Potential opening up your market is an "asset" as long as all the other people at the bargaining table want it. In a sense it has a "market price" If you think you can get a better price next round you can probably wait for that.

More altruistically, it is also one of the few ways you can effectively influence third world nations.

3) I think there ARE ways to beat having a perfectly open market. If one country opens up their market all by itself (with nothing in exchange or too fast) it could well find itself to be the looser even if opening up markets is good for everyone in general.

Having said that, I think agriculture is almost never one of those things where you benefit from subsidies even if the other countries have none, unless you expect a global war in the near future. (Hmmm...)

Posted by Genius : 7/26/2006 06:36:00 PM

US bashing is such a common leftwing pastime that you might want to balance your US bashing with some EU bashing as well. It subsidises its farmers at three times the rate of the US, has more closed markets and more export subsidies. It refused to move because France believes it has already "reformed" which means upping subsidies by 50% over the next five years.

Japan also shuts out the most efficient rice producers (e.g. Thailand and Vietnam) from its market, as does South Korea.

The EU and Japan are both far bigger agricultural protectionists than the US - the US offered to abolish export subsidies for agriculture as of next year. I am hardly defending the US protectionism, but it is not the biggest problem. With the EU - which claims the moral highground on so much internationally - not moving, why the hell should the US?

Posted by libertyscott : 7/26/2006 08:36:00 PM